Debt refinancing may mean lower rates for utility customers

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FRANKFORT, Ky. (WTVQ) – Customers of Kentucky-American Water could get a little money back or lower rates in the future, under an order handed down today by the state’s Public Service Commission.

The PSC directed Kentucky-American to file within 15 days its suggestion for returning the savings from the refinancing $71.39 million in debt to ratepayers.

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The case stems from Kentucky-American’s last rate case, which was concluded in June 2019 with the PSC granting the utility a rate increase. The increase was based on Kentucky-American’s projected costs for the 12 months ending June 30, 2020.

During the rate case, Kentucky-American said it might refinance more than $97 million in long-term corporate debt over the following two years. It further stated that that a refinancing would be followed by an evaluation of whether a rate change would be appropriate to reflect the savings as a result of lower interest costs.

Kentucky-American ultimately refinanced $71.39 million in long-term debt on November 19, 2019. Because the refinancing took effect during the period used to determine the utility’s current rates, the PSC decided the utility must reflect the savings in its rates.